Lennar to sell $500M debt, buy back $200M in notes

Homebuilder Lennar Corp. said Monday it plans to sell $500 million worth of senior debt and use part of the proceeds to buy back $200 million in other notes in a move to reduce its interest payments.

The company will sell $250 million of senior notes due 2018 by May 3, and $250 million worth of convertible senior notes that will come due in 2020. Lennar will use about $200 million from the 2018 notes sale to launch a tender offer for debt due between now and 2013.

The tender offer for the 5.125 percent senior notes due 2010, 5.95 percent notes due 2011 and its 5.95 percent notes due 2013 will expire on May 24. Dealer managers for the debt repurchase are Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. Global Bondholder Services Corp. will serve as the depositary and information agent.

The rest of the proceeds will be used for general corporate purchases.

Underwriters of the convertible debt offering will have the option to buy up to an additional $37.5 million worth of notes in the event demand exceeds initial supply.

The notes due in 2020 will pay interest twice a year and will be convertible into shares of the company's Class A common stock, at a price to be determined later. The notes will come due on Dec. 1, 2020 unless redeemed, repurchased or converted beforehand.